I am 15 points away from my short put strike so i really do not want to jump the gun on adjusting it yet with 4 more trading days to expiration. I am gonna sit tight and see how much we rally today, if it holds, and how we are heading into next week. I do not adjust because it is cheap, I adjust because I have no choice. Wednesday I had no choice and I kept my short strike from being ITM. (so far lol). I am more inclined to watch the call side and see if there are any significant profits to take and maybe roll them down another 5-points from 1220.
BTW: It's not when YOU adjust that the market will turn around and go the other way. It's when I post an adjustment that that will happen . This is exactly what happened yesterday, but I stuck with my plan. I keep telling myself that hindsight is 20/20. Hindsight is 20/20. Hindsight is 20/20....
"Quite impressive Andy..." -- Phil, maybe so, but I can say without a doubt that I can't go through this on a regular basis. Going forward, I might consider halving my position size (I'm trading roughly the same margin as you). Also maybe adding SPX calendar spreads (goodness when vol goes up) to balance the condors (hurts when vol goes up)...
Is anybody looking at November spreads. We have 5 weeks to expiration and I believe that this is also within Coach's time frame for the next month. I just closed out a 1290/1300 Nov yesterday keeping a little more than 80% of the premium, but still have an 1130/1140. I've currently got a trade in for a 1250/1260 bear call, but it hasn't been filled yet. Anyone care to share?
Andy: I hear you. I went through worse in July as my spread was ITM and I never want to go through that excrutiating experience again. That's why I adjust earlier and push my spreads further OTM than coach. Also at that time I wasn't part of this discussion group, which I highly recommend to all who are considering trading spreads.
Months like these are exactly why one should leave some margin/haircut in reserve every expiration. I had a "bunch" of the 118/116 OCT SPY spreads. Yesterday I rolled down to quantity (1.7)(bunch) of the 116/114 and 115/113 spreads. Now assuming (big assumption) all goes well Iâll actually collect more in OCT premium than I would have before even after taking the losses on the roll. Tough on the blood presure though.
Well you are not expected to go through this often. As I said from my experience, this will most likely happen once or twice a month. And regardless you still are making a good return this month! lol. But the more important point I think you are making is to trade within your comfort zone. Let me say this to all readers. DO NOT LET A STRING OF PROFITABLE MONTHS BE THE REASON YOU START UPPING YOUR NUMBER OF CONTRACTS AND PUTTING MORE MARGIN AT RISK!! It is a common mistake that when you start getting a strong of great returns you start increasing your risk and start to lose sight of your risk management. Ballooning up like that is how you get killed when that loss finally comes around. So I hope no one has been ratcheting up just because they have had a few good months. Stay consistent. So if you are not comfortable with the amount then certainly reduce it to a more comfortable level. Also realize that a month where adjustments are needed is part of trading this strategy. It comes with the profits and is needed in order to keep those profits. It is not that I have big balls <he said "balls">, it is from experience that I acccept adjustments as a part of trading this approach and I do not mind taking a limited loss in a month since it is aprt of risk management. So yes this month has been a little more stressful than previous months but it is part of trading and I work hard at keeping a level hard, which certianly is not easy. I was starting to get a little nervous and worried yesterday when the S&P was down over 7 points but making the adjustments on Wednesday allowed me to remain somewhat calm in that I could still adjust on Friday if I needed to. I am not claiming I am the most un-emotional trader, please do not get me wrong. It is that I need to maintain my confidence and keep emotions in check as much as possible or I know I will get eaten alive. It takes a lot of effort, but I just convince myself that there is nothing wrong with taking a loss, it is wrong to take a big loss. So if I just follow the plan I can limit my losses and still have positive returns. I think it is no different than sports in a sense that if you can work to control your anxeity to an extent (it will never be controlled fully) you can make better decisions. That is why you never trade with the mortgage money or money you will "die" if you lose. That is also why I do not put 100% of my capital into this strategy. These safety nets give me some peace of mind and it eases the tension. Please do not get me wrong. I am not trying to come across as a guru with all emotions in check. I have been stressed these past two weeks. What I am getting it is that I am have worked hard to get most of my irrational emotions in check and give myself safeguards so that I can think clearer and make more rational analytical decisions. This is as important to risk management as anything else. Next week the market could collapse again and I cannot do anything about it but adjust adjust adjust and let time run the last 4 days of the week. At least today my cushion has increased so far and each day like this is good. I think if you try and not take it personally (no one is trying to screw you out of your money....I mean outside of brokers and MMs lol). You will have a lot of good months (hopefully) and some losing months but the goal is overall positive returns! So trade even if you are a little nervous but if the position has got you tossing and turning and you are a wreck, then your own body is clearly telling you that your positions are bigger than you can handle. Listen to it Phil